Is This the Death Blow for the Living Wage?

State Supreme Court Passes on Attempt to Revive Job-Killing Ordinance

This is tough news for unions, but good news for taxpayers and, over the long haul, for workers as well. The Michigan Supreme Court refused to hear an appeal of a lower court decision invalidating Detroit's Living Wage Ordinance. While this doesn't immediately invalidate living wage ordinances in the state, it does send a fairly clear signal that the state's highest court is not eager to salvage living wage.

Last September, the Court of Appeals (an intermediate court) found that Detroit's living wage ordinance was invalid in light of the Michigan Supreme Court decision in Lennane v. Detroit, which dates back to 1923. The Court of Appeals opinion practically begged the Supreme Court to overturn Lennane, but held that unless and until the Supreme Court did so it was obligated to follow precedent.

About a week ago the Supreme Court decided, by a 6-to-1 vote, not to hear an appeal of the Court of Appeals decision. Lennane remains good law, and municipal living wage ordinances are left on extremely thin ice.

Living wage laws attempt to increase wages for unskilled workers by forcing companies that do business with the city to pay all their workers at a rate that is well above the federal or state minimum. Economically this is a futile strategy though. Wages in the market reflect skills and productivity; employers respond to artificially high wages by reducing the number of employees they hire. Without living wage laws low wage workers still often move on to higher-wage positions. Living wage laws might benefit a fortunate minority of workers, but otherwise their main effect is to increase the cost of government and eliminate jobs.

Congratulations are due to Associated Builders and Contractors, which took the lead in litigating this issue. The next step will be the filing of lawsuits to invalidate the remaining ordinances. Unless the Supreme Court decides to reconsider the issue, living wage's days are numbered in Michigan.